Two states propose abolishing state income taxes

Two U.S. states, both governed by Republicans, are considering joining seven other states that do not levy state income taxes against their citizens. Lawmakers from Georgia and South Carolina, in a bid to curb government waste and grow their economies, have introduced legislation that would phase out their states’ income taxes.

States that have no income tax include Florida, one of the fastest growing states in the country, and Texas - which grossed more than $264.7 billion a year in exports—more than exports of California ($161.9 billion) and New York ($81.4 billion) combined, in 2012. Two more states, Tennessee and New Hampshire, tax only dividend and interest income.

A legislator from South Carolina proposed a similar plan in December that has since gained traction. The proposal by State Senator Katrina Shealy-R would gradually phase out the state’s income tax. Shealy says a nine percent reduction in expenses by each cabinet would pay for the bill, adding, “We waste a lot of money.”

In contrast, California is high on the list of states with the heaviest tax burden per capita as ranked by the Tax Foundation, a non-partisan tax research group in Washington, D.C. California’s sales tax rate is 8.25%, the highest in the nation, and the state’s income taxes are among the highest in the country.

However, states from the country’s northeast region hold the dubious distinction of levying the highest state taxes on businesses and residents. For example, New York and New Jersey consistently rank as the states with the highest tax burden, topping the list of worst states for business taxes. Additionally, New York counties have made the top of the list for having the highest property taxes in the nation.

Lawmakers in Georgia and South Carolina believe that doing away with state income taxes will facilitate economic growth and attract new citizens that are bailing out of states with high tax burdens.